Pay the accrued interest on the educational loan before the student finishes school.

Students who have Unsubsidized Federal Stafford loans or other educational loans with accruing interest on the principal balance should consider that when a student completes school, the accrued interest is added to the original loan amount and will be nondeductible as student loan interest to the taxpayer. It will become part of the principal balance of the loan, if the student does not pay that interest before they finish school. If the student does pay the accrued interest on the educational loan before they finish school, the interest is then deductible to the taxpayer as student loan interest.